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Master Purchase Agreement and Master Lease Agreement shall
remain in full force and effect.
The Barnesville School agrees to use the proceeds from
the aforesaid Master Lease Agreement to first satisfy the
obligations under the Recourse Note and Security Agreement
dated December 31, 1985, between R. Edwin Brown, Payor, and
Federal Data Corporation, Payee, as provided in the Agency
Agreement between said parties.
On January 2, 1990, petitioner’s outstanding obligation under the
FDC note was $1,540,280.
On their Federal income tax returns for years 1985-89,
petitioners claimed deductions for depreciation and interest
relating to the equipment-leasing transaction. Three separate
statutory notices of deficiency were issued, in which respondent
disallowed petitioners’ claimed deductions pursuant to section
465. Petitioners petitioned the Tax Court in each instance.
Losses in the amount of $549,122 were disallowed for those years
and were treated as a carryforward of suspended losses. On July
21, 1993, respondent sent petitioners a statutory notice of
deficiency for the 1990 tax year, determining a gain on the
disposition of the computer equipment to the School and allowing
the gain to be reduced by suspended losses for years 1985-89.
However, on February 10, 1994, in response to petitioners’
continued litigation in the Tax Court with respect to the 1988
and 1989 losses, respondent sent petitioners a second statutory
notice of deficiency for the 1990 tax year allowing the gain to
be reduced by suspended losses for years 1985-87 only.
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Last modified: May 25, 2011